A Stardust memory?

That’s probably just the first time I’ll use some permutation of that phrase over the next five years, because Boyd Gaming announced this morning that it is closing the Stardust to make way for Echelon Place. Because I’m such a “gaming industry insider,” I arrived at the office and found a copy of the press release sitting in my email inbox. Here it is:

Boyd Gaming Corporation today announced that it will develop a multi-faceted, world-class resort complex on its 63-acre site on the Las Vegas Strip. The development, scheduled to open in early 2010, is expected to be among the most significant projects in Las Vegas’ ongoing evolution, which continues to transform the city into one of the leading resort destinations in the world. The Company expects that the development will be a significant leader in Las Vegas’ key growth centers of casino gaming, luxury hospitality including world-class dining and nightlife experiences, shopping, meetings and conventions, and entertainment.

Boyd Logo

The $4.0 billion development, to be named Echelon Place, will combine the $2.9 billion wholly-owned Echelon Resort with hotel and retail joint ventures between the Company and key strategic partners. The wholly-owned Echelon Resort will be operated principally by the Company, but include operating arrangements with leaders in the hotel, restaurant, nightlife and entertainment industries who will bring unique brands and industry-leading reputations and relationships to the project.

The development master plan, Echelon Place, is expected to be fully developed in one phase and integrate several elements:

* Four distinctive hotels featuring 5,300 guest rooms and suites

-Echelon Resort

The Company will own and operate the 3,300-room Echelon Resort, encompassing two upscale hotels, a 2,600-room Resort Tower and a 700-room Suite Tower, each containing its own luxurious spa. Both hotels will connect directly to Echelon’s extensive public areas containing a 140,000 square foot casino, 25 restaurants and bars, and lushly landscaped pool and garden areas. Echelon will be a contemporary and upscale resort, complemented by extensive, high quality and innovative business and meeting facilities. Echelon will include an expansive 4,000-seat theater with a large stage and stadium seating designed to accommodate major concerts and production shows. In addition, a more intimate 1,500-seat theater will house smaller shows and touring acts.

-Shangri-La Hotel, Las Vegas

The Company announced it has entered into a management agreement with Shangri-La Hotels and Resorts, Asia Pacific’s leading luxury hotel group, to include a Shangri-La Hotel within Echelon Place. Synonymous in Asia with luxurious and comfortable hotel accommodations, fine food and caring service, the distinct nature of each Shangri-La upscale property demonstrates an exclusive charm and personality that large chains cannot approximate. The Shangri-La Hotel, Las Vegas, which will be owned by the Company and operated by Shangri-La, will include 400 guest rooms and suites, a 20,000 square foot CHI spa, well appointed premium meeting space and two restaurants. Shangri-La will have its own porte cochere and lobby.

-Delano Hotel and Mondrian Hotel

The Company has entered into a 50/50 joint venture agreement with the Morgans Hotel Group, an innovator and continuing leader in the lifestyle/boutique hotel sector, for the development of two signature hotels within Echelon Place, Delano and Mondrian, at a cost of approximately

$700 million. During the first half of 2007, the Company will contribute

6.5 acres of land and Morgans Hotel Group, which will manage both hotels, will contribute $97.5 million in cash to the venture, and the venture will arrange non-recourse project financing to develop the properties.

Delano in South Beach Miami has been an international destination for glamour, entertainment, and sophisticated nightlife for over a decade, and played a catalyzing role in the revival of South Beach. Delano Hotel Las Vegas will include 600 guest rooms and suites, a destination nightclub, lobby bar and Asia de Cuba restaurant. It will also feature an Agua Spa with fitness center, private pool and recreation area, and a separate porte cochere and lobby.

Today, Mondrian’s elegant urban resort is a Hollywood haven for both business and nightlife. Mondrian Hotel Las Vegas, accommodating equally the refined business traveler and the leisure escapee, will include 1,000 guest rooms and suites, a distinctive bar and restaurant, meeting and conference space, private pool and recreation area with Skybar, and a separate porte cochere and lobby.

* Las Vegas ExpoCenter

The Company will develop, own, and operate the Las Vegas ExpoCenter at Echelon Place to meet the growing demand for convention and exhibition space integrated into large luxury resorts on the Las Vegas Strip. Las Vegas ExpoCenter will feature 650,000 square feet of exhibition and pre-function space and 175,000 square feet of meeting and conference space. Combined with the meeting space within Echelon Resort, the total meeting and exhibition space at Echelon Place is expected to exceed one million square feet, highlighted by over 200 meeting rooms.

* Retail Promenade

The Company is in discussions with potential strategic partners for a 50/50 joint venture development of a retail promenade at Echelon Place. Plans call for over 350,000 square feet of unique shopping, including a mix of luxury, affordable luxury and bridge retailers, as well as a variety of dining, nightlife, and cultural experiences.

* Other Master Plan Elements

Echelon Place is master-planned and designed to optimize access and parking. Entry into Echelon Place will be from three of the four sides of the property. Valet parking and parking structures will be located conveniently to all major components of Echelon Place and will provide covered parking for nearly 8,000 cars. In addition, the master plan includes a three-acre parcel reserved for future development.

Development Team

The Company announced that Bob Boughner will leave his position at Borgata in Atlantic City and return to Las Vegas to lead the development of Echelon Place as President and Chief Executive Officer of Echelon Resorts.

William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, commented, “We are very pleased to have Bob return to reprise our success at Borgata and lead the development of Echelon Place. From concept to design to construction to opening to operating, Bob’s outstanding performance at Borgata, one of our industry’s finest success stories, is widely acclaimed. In my opinion, there is nobody better for this job.”

Joining Bob Boughner from Borgata will be Kevin Sullivan, who after having managed several key development and administrative areas at Borgata, will serve as Senior Vice President and Chief Administrative Officer for Echelon Resorts. Many of the design and construction firms involved in the development of Borgata are expected to play major roles in the Echelon Place development, including Tishman Construction Corporation, who will serve as construction manager.

Bob Boughner commented, “True to the evolution of Las Vegas as a world class destination, Echelon Place will integrate a compelling collection of brands and environments in a single and auspicious development. We are assembling an internationally distinguished group of strategic partners in the hotel, restaurant, retail, entertainment and nightlife arenas to complement our Company’s own skills and resources. We will draw upon our highly successful Borgata experience and are committed to developing a resort destination that can be counted among the best Las Vegas has seen.”

The Company also announced that, subject to regulatory approval, Larry Mullin has been promoted to President and Chief Operating Officer of Borgata and will be responsible for all day-to-day operations of the property. Bob Boughner continued, “Larry Mullin has had a distinguished 20 year career in the gaming industry and has played a vital role in the success of Borgata. We are extremely confident in his abilities.” Bob Boughner will continue to oversee Borgata’s public space expansion project that is scheduled to open in the second quarter of 2006.

The Company’s 63-acre Las Vegas site is currently occupied by the Stardust Hotel and Casino. The Company expects to operate the Stardust through 2006 as it advances the Echelon Place planning, design and permitting process. In connection with the announced intention to discontinue operations at the Stardust, the Company will record an impairment charge in the first quarter of 2006 in the approximate range of $50 million to $60 million pre-tax.

For additional information and to follow the progress of the development of Echelon Place, the Company today launched the Echelon Place website, located at www.echelonresort.com.

Here are my initial thoughts:

– This is a very smart, well-planned move. Boyd has known that they would redevelop the Stardust site for years. The wrong way would have been to build a $200 million luxury suite tower just tacked on to the existing casino, then add different atttractions piecemeal, and remodel the existing property on the fly. But because Boyd is getting a nice income from the Borgata, they can afford to take the Stardust offline for three years while Echelon is being developed. There won’t be any condos, which is smart because the luxury condo market at that end of the Strip will likely be saturated anyway, particularly if Wynn eventually uses some or all of the golf course to develop condos.

– Boyd is using a very experienced management team: Bob Boughner worked wonders with the Borgata in Atlantic City, which is doing for that city what Mirage did for Vegas in 1989. The Borgata is simply outstanding–I’ve toured the property and regularly spend soem time there while I’m in Atlantic City, and people here should be very excited about seeing a resort of that caliber on the Strip. It’s that good.

– I like the fact that the project includes several distinct hotels. I think it will have a more urban feel than a big, super-sized resort, which is the direction the Strip is heading towards.

– Yes, it’s sad to see the Stardust go away, but, in 2006, would rather stay at the Dunes or the Bellagio? I’m as broken-up as anyone about seeing the Boardwalk close–it’s long been a favorite of mine–but the Strip is in the business of hospitality, preserving old hotel.

– That said, it would be nice if they had a few nods to the Stardust. I think that a rotating lounge called the Stardust room would be pretty swanky. I’d hang out there, at least. Then again, I sometimes hang out in the Carousel Bar at Circus Circus. Just as long as its not an “ultra lounge” or “meta lounge.”

This is going to be a fantastic development to watch, and as sure a bet as any on the Strip.

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